The term dark pool might sound ominous, but investors think building one could prove to be a boon for the crypto market.
Announced today, Republic Protocol has officially completed an initial coin offering (ICO) for its REN token, raising 35,000 ether (roughly $30.5 million at current prices) from lead investors Polychain Capital and FBG, as well as funds like Huobi, Hyperchain Capital and Signal Ventures.
Along with retail investors, the participants above are betting big on a way to execute large trades without spooking the market. At least, that’s the argument advanced by Taiyang Zhang, CEO of Republic Protocol, who sees the project as a trustless alternative system for crypto trading.
Zhang told CoinDesk:
“One of the biggest problems is there is a huge price slippage with any of these cryptocurrencies, especially when you are trying to trade large amounts.”
In other words, if a whale goes to move an unusually large quantity of bitcoin or ether today, that sell order will likely hit an exchange or a broker, thereby inspiring other traders to start selling as well. If the trade ends up getting broken into pieces over time, the market will start seeing those large sales, and it will drive the price down even further.
Not only does this contribute to general volatility, but it means the whale’s last trades go for significantly less than the earlier ones. This is, of course, non-optimal, especially for investors. So, it’s little wonder that major crypto investors would be eager to find a solution.
In total, Polychain and other large investors picked up 60.2 percent of the total supply of 1 billion REN tokens. Roughly 15 percent were set aside for the team, advisors and early partners, with another 5 percent set aside to build the community. (Republic Protocol has 19.9 percent in a reserve to provide liquidity in the early days.)
This is notable, as participants in the network will need REN to pay nodes and run the computations that find trading partners.